Sinovac Reports Unaudited Second Quarter 2013 Financial Results - Conference call scheduled for Wednesday, August 14, 2013 at 8:00 AM EDT PR Newswire BEIJING, Aug. 13, 2013 BEIJING, Aug. 13, 2013 /PRNewswire/ -- Sinovac Biotech Ltd. (NASDAQ: SVA), a leading provider of biopharmaceutical products in China, announced today its unaudited second quarter and half yearfinancial results for the period ended June 30, 2013. Second Quarter 2013 Financial Highlights (period-over-period comparisons to second quarter 2012) oTotal sales increased by 86.4% to $17.5 million from $9.4 million. oGross profit increased by 70.1% to $13.6 million from $8.0 million. oNet income attributable to common stockholders was $1.3 million, or $0.02 per basic and diluted share, compared to net loss attributed to common stockholders of $1.6 million, or $0.03 per basic and diluted share. oCash and cash equivalents totaled $92.0 million as of June 30, 2013, compared to $91.2 million as of December 31, 2012. Recent Business Highlights On July 30, 2013, following the completion of inspection on clinical sites by the Beijing Drug Administration, Sinovac's registration documentations for its proprietary EV71 vaccine were submitted to and accepted by the Center for Drug Evaluation (CDE), China Food and Drug Administration for the technological reviewon Sinovac's new drug application (NDA)filing. On August 6, 2013, the phase II clinical results for Sinovac's proprietary EV71 vaccine were published online in The Journal of Infectious Diseases (JID), the premier global journal for original research on infectious diseases. The paper is entitled "Immunogenicity, Safety, and Immune Persistence of A Novel Inactivated Human Enterovirus 71 (EV71) Vaccine: A Phase II, Randomized, Double-Blind, Placebo-Controlled Trial." Dr. Weidong Yin, Chairman, President and CEO, commented, "We are pleased to report another quarter with strong sales rising by 86.4%, driven by robust hepatitis vaccines sales resulting from a favorable competitive environment in China and successful initiatives focused on each market segment implemented by our sales team. With this diversified sales strategy, Sinovac is poised to maximize the upcoming commercial opportunity for our EV71 vaccine for which the NDA filing is under review in China. The top line growth in the current period was the key driver of a higher gross profit and a higher net income as compared to previous quarters." Dr. Yin continued, "The review of our NDA filing for our EV71 vaccine is also moving forward to the technological review process by the CDE. Hand, foot and mouth disease (HFMD) continues to represent a significant unmet medical need in China with reports of over 900,000 HFMD cases and 156 fatalities in first half of 2013. We aim to launch the EV71 vaccine to provide a solution to address this unmet medical need as no treatment and prevention options exist for this highly contagious disease impacting children in China and surrounding countries." Financial Review for Second Quarter Ended June 30, 2013 An analysis of sales and gross profit is as follows: In USD'000 2013Q2 % of total sales 2012Q2 % of total sales (Unaudited) (Unaudited) (Unaudited) (Unaudited) Hepatitis 7,021 40.2% 3,561 38.0% A(Healive) Hepatitis 9,586 54.9% 6,070 64.8% A&B(Bilive) Hepatitis vaccines 16,607 95.1% 9,631 102.8% Influenza vaccines 48 0.3% -268 -2.9% Core sales 16,655 95.4% 9,363 99.9 Animal vaccine 64 0.4% 2 0.01% Mumps 732 4.2% - - Total sales 17,451 100% 9,365 100% Cost of goods sold 3,861 1,376 Gross profit 13,590 77.9% 7,989 85.3% Total sales increased by 86.4% to $17.5 million in the second quarter of 2013 from $9.4 million in the second quarter of 2012. Both Healive and Bilive contributed to the sales growth in the ^ second quarter, resulting from the favorable competitive environment in the private pay market in China and initiatives implemented by the Company's sales team. Gross profit increased by 70.1% to $13.6 million for the second quarter of 2013 from $8.0 million in the same period of 2012. Gross margin was 77.9% in the second quarter of 2013, compared to 85.3% in the same period of 2012. Excluding the impact of the H5N1 inventory provision of $0.2 million, the gross margin was 79.0% in the second quarter of 2013. The decline in gross margin was affected by the sales of different products mix with different gross margin. SG&A expenses for the second quarter of 2013 were $8.3 million, compared to $6.7 million in the same period of 2012. Selling expenses as a percentage of second quarter 2013 sales was 32.0%, compared to 38.9% during the second quarter of the prior year. The decrease in selling expense as a percentage of revenue was mainly due to the increased sales team productivity. The G&A expenses for the second quarter of 2013 decreased to $2.7 million from $3.1 million in the second quarter of 2012. The decrease was mainly due to the effect that the bonuses, paid out or to be paid out, were recorded against a previously accrued liability account, named staff benefits, rather than charged to expenses. This had the effect of partially offsetting increased G&A resulting from the higher operating costs because the Company's Changping site is now fully operational. A part of the operating cost increase was related to the ongoing validation activities on the manufacturing facilities in support of the EV71 vaccine for which the NDA is currently under review. R&D expenses in the second quarter of 2013 were $2.0 million, a decrease from $4.7 million in the same period of 2012. The lower R&D expenses in the current quarter were attributable to the completion of the phase III study of EV71 vaccine candidate in the first quarter of 2013. The R&D activities in the second quarter focused on the other vaccine candidates in the Company's pipeline. Depreciation of property, plant and equipment and amortization of licenses and permits for the second quarter of 2013 were $0.5 million, compared to $0.3 million for the same period of last year. Depreciation increased because more assets were in service at the Changping facility as compared to the second quarter of 2012. Net income attributable to common stockholders was $1.3 million, or $0.02 per basic share and diluted share, for the second quarter of 2013, compared to a net loss attributed to common stockholders of $1.6 million, or $0.03 per basic and diluted share, for the second quarter of 2012. Excluding the impact of the bonus revision of $1.6 million, which was paid out or to be paid out from an accrued liability account rather than charged to expenses, the net loss of the second quarter of 2013 would approximately be $0.3 million, or $0.01 per basic share and diluted share. Financial Review for the Six Months Period Ended June 30, 2013 An analysis of sales and gross profit is as follows: In USD'000 2013 YTD % of total sales 2012 YTD % of total sales (Unaudited) (Unaudited) (Unaudited) (Unaudited) Hepatitis 13,199 48.0% 5,172 33.7% A(Healive) Hepatitis 12,581 45.7% 10,085 65.8% A&B(Bilive) Hepatitis vaccines 25,780 93.7% 15,257 99.5% Influenza vaccines 330 1.2% 46 0.3% Core sales 26,110 94.9% 15,303 99.8% Animal vaccine 78 0.3% 35 0.2% Mumps 1,316 4.8% - - Total sales 27,504 100% 15,338 100% Cost of goods sold 6,853 3,631 Gross profit 20,651 75.1% 11,707 76.3% Total sales were increased by 79.3% to $27.5 million in first half of 2013 from $15.3 million in the same period of 2012. The sales growth was achieved across every sales channel, including the public market, private market and sales through distributors, which demonstrated the success of the Company's sales strategy of combining a diversified sales model to largely improve the market coverage and penetration. Gross profit of the first half year of 2013 increased by 76.4% to $20.7 million from $11.7 million in the same period of 2012. Gross margin was 75.1%, compared to 76.3% of the same period of last year. Excluding the impact of the H5N1 inventory provision of $0.8 million, the gross marginwas 78.1%. Selling, general and administrative expenses for the first half of 2013 were $14.6 million, compared to $11.0 million in the same period of 2012. Selling expenses as a percentage of first half year of 2013 sales was 31.3%, compared to 37.9% of first half year of the prior year. The G&A expenses increased to $6.0 million in the first half of 2012from $5.2 million for the first half year of the prior year. The factors affecting selling, general and administrative expenses for the first half of 2013 were the same as for the second quarter, described above. Research and development expenses for the first half of 2013 was $3.9 million, a $8.1 million decrease from $12.0 million for the same period in 2012. The lower R&D expenses were attributable to the completion of the phase III trial for the EV71 vaccine. Depreciation of property, plant and equipment and amortization of licenses and permits for first half year of 2013 was $1.3 million, compared to $0.6 million for the same period of last year. Depreciation increased because more assets were in service at the Changping facility compared to the same period in 2012. Net loss attributable to stockholders in the first half of 2013 was $0.7 million, or $0.01 per basic and diluted share, compared to a net loss of $7.2 million, or $0.13 per basic and diluted share, for the same period of last year. Excluding the impact of the bonus revision of $1.6 million, which was paid out from an accrued liability account rather than charged to expenses, the net loss of the first half year of 2013 would approximately be $2.3 million, or $0.04 per basic share and diluted share. As of June 30, 2013, cash and cash equivalents totaled $92.0 million, compared to $91.2 million as of December 31, 2012. Net cash used in operating activities was $9.3 million in the first half of 2013. Net cash used in investing activities was $2.2 million, which was mainly used to acquire property, plant and equipment for the Changping site. Net cash provided by financing activities was $11.6 million in the first half of 2013, including loan proceeds of $10.8 million. The Company continues to source new financing resources to commercialize other pipeline products when appropriate. Management Change Ms. Nan Wang, Vice President of Sinovac, has been appointed as Chief Financial Officer, effective June 1, 2013. Mr. Danny Chung, who was Chief Financial Officer, has resigned for family reasons. Other Developments Sinovac owns a controlling 73.09% interest in Sinovac Biotech Co., Ltd. (Sinovac Beijing), while Sino Bioway holds the remaining 26.91% non-controlling interest. On April 8, 2013, the board of directorsof Sinovac Beijing approved the transfer of Sino Bioway's interest in Sinovac Beijing to a subsidiary of Sino Bioway, Xiamen Bioway Biotech Co., Ltd. The transfer was completed on May 13, 2013. There was no impact on Sinovac Beijing's daily operations and no change to the composition of the board of directors of Sinovac Beijing after the completion of the transaction. Conference Call Details The Company will host a conference call prior to the market opening on Wednesday, August 14, 2013, at 8:00 a.m. EDT (August 14, 2013 at 8:00 p.m. China Standard Time) to review the Company's financial results and provide an update on recent corporate developments. To access the conference call, please dial 1-877-407-0784 (USA) or 1-201-689-8560 (International). A replay of the call will be available from 11 a.m. EDT on August 14, 2013, to August 28, 2013, at midnight. To access the replay, please dial 1-877-870-5176 (USA) or 1-858-384-5517 (International) and reference the replay pin number 418775. A live audio webcast of the call will also be available from the investors section on the corporate web site at www.sinovac.com. A webcast replay can be accessed on the corporate website beginning August 14, 2013, and the replay will remain available for 30 days. About Sinovac Sinovac Biotech Ltd. is a China-based biopharmaceutical company that focuses on the research, development, manufacturing and commercialization of vaccines that protect against human infectious diseases including hepatitis A and B, seasonal influenza, H5N1 pandemic influenza (avian flu), H1N1 influenza (swine flu) and mumps, as well as animal rabies vaccine for canines. The Company recently concluded the phase III clinical trial for enterovirus 71 (against hand, foot and mouth disease) and filed new drug application with China Food & Drug Administration. In 2009, Sinovac was the first company worldwide to receive approval for its H1N1 influenza vaccine, Panflu.1, and has manufactured it for the Chinese Central Government, pursuant to the government-stockpiling program. The Company is also the only supplier of the H5N1 pandemic influenza vaccine to the government-stockpiling program. Sinovac is developing a number of new pipeline vaccines including vaccines for pneumococcal polysaccharides, pneumococcal conjugate, varicella and rubella. Sinovac sells its vaccines mainly in China and exports selected vaccines to Mongolia, Nepal, and the Philippines. Sinovac has also been granted a license to commercialize seasonal flu vaccine in Mexico. Safe Harbor Statement This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by words or phrases such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, the business outlook and quotations from management in this press release contain forward-looking statements. Statements that are not historical facts, including statements about Sinovac's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those contained in any forward-looking statement. Sinovac does not undertake any obligation to update any forward-looking statement, except as required under applicable law. Helen Yang/Chris Lee Sinovac Biotech Ltd. Tel: +86-10-8279-9659/9696 Fax: +86-10-6296-6910 Email: email@example.com Investors: Stephanie Carrington The Ruth Group Tel: +1-646-536-7017 Email: firstname.lastname@example.org Media: Aaron Estrada The Ruth Group Tel: +1-646-536-7028 Email: email@example.com SINOVAC BIOTECH LTD. Consolidated Balance Sheets (Unaudited) June 30,2013 (Expressed in U.S. Dollars) June 30,2013 December 31,2012 Cash and cash equivalents 92,046,428 91,240,956 Accounts receivable 31,248,974 23,440,135 Inventories 16,655,331 10,529,476 Prepaid expenses and deposits 914,771 1,072,078 Total current assets 140,865,504 126,282,645 Property, plant and equipment 79,838,322 80,083,383 Long-term inventory - 28,692 Long-term prepaid expenses 213,310 289,766 Deposits for acquisition of equipment 280,534 483,278 Deferred tax asset 467,490 445,589 License and permit 964,416 1,149,914 Total assets 222,629,576 208,763,267 Current liabilities Loans payable 6,213,808 3,328,590 Accounts payable and accrued liabilities 26,522,072 24,777,808 Income tax payable 242,381 238,775 Deferred revenue 59,471 1,378,425 Deferred research grants 437,609 431,097 Total current liabilities 33,475,341 30,154,695 Deferred research grants 4,593,360 4,068,602 Loans payable 39,425,475 31,181,235 Due to related party 3,278,261 3,230,125 Deferred revenue 10,955,779 10,693,247 Total long-term liabilities 58,252,875 49,173,209 Total liabilities 91,728,216 79,327,904 Commitments and contingencies Stockholder's equity Common stock 55,353 55,092 Additional paid in capital 106,808,942 106,245,934 Accumulated other comprehensive income 12,983,039 11,770,927 Dedicated reserves 11,808,271 11,808,271 Accumulated deficit (12,845,353) (12,156,414) Total stockholders' equity 118,810,252 117,723,810 Non-controlling interest 12,091,108 11,711,553 Total equity 130,901,360 129,435,363 Total equity and liability 222,629,576 208,763,267 SINOVAC BIOTECH LTD. Consolidated Statements of Operations and Comprehensive Income (loss) June 30,2013 (Unaudited) (Expressed in U.S. Dollars) Three Months ended June Six Months ended June 30 30 2013 2012 2013 2012 Sales 17,451,442 9,364,632 27,503,657 15,338,099 Cost of sales(exclusive of depreciation of land use right and amortization of licenses and permits of 3,860,856 1,375,917 6,852,720 3,631,206 $201,211(2012-$67,486) for three months and $97,449(2012-$12,507) for six months Gross profit 13,590,586 7,988,715 20,650,937 11,706,893 Selling, general and 8,265,312 6,700,526 14,628,669 11,020,815 administrative expenses Provision for doubtful 603,601 885,791 - account Research and development 2,041,639 4,676,703 3,889,246 12,018,875 expenses Depreciation of property, plant and equipment and 541,720 313,265 1,313,866 620,708 amortization of licenses Loss (gain) on disposal and impairment of 82 - (2,319) - property, plant and equipment Government grants - (405,082) (476,286) recognized in income Total operating expenses 11,452,354 11,285,412 20,715,253 23,184,112 Operating income (loss) 2,138,232 (3,296,697) (64,316) (11,477,219) Interest and financing (770,319) (232,078) (1,433,406) (446,398) expenses Interest income 582,602 498,856 1,023,920 1,096,527 Other income (expenses) (53,667) 14,635 7,095 132,713 Income (loss) before income taxes and Minority 1,896,848 (3,015,284) (466,707) (10,694,377) interest Income tax recovery 17,272 797,462 14,783 800,364 Consolidated net income 1,914,120 (2,217,822) (451,924) (9,894,013) (loss) Net Income (loss) attributable to the 595,222 (587,684) 237,015 (2,650,820) noncontrolling interest Net income (loss) attributable to 1,318,898 (1,630,138) (688,939) (7,243,193) stockholders Net income (loss) 1,914,120 (2,217,822) (451,924) (9,894,013) Foreign currency 1,118,992 (469,734) 1,352,701 177,049 translation adjustment Total comprehensive 3,033,112 (2,687,556) 900,777 (9,716,964) income (loss) Less: comprehensive (income) loss attributable 706,887 (633,486) 377,604 (2,613,075) to non-controlling interests Comprehensive income (loss) attributable to 2,326,225 (2,054,070) 523,173 (7,103,889) stockholders Weighted average number of shares of Basic 55,056,191 54,804,498 54,995,674 54,784,801 Diluted 55,522,748 54,804,498 54,995,674 54,784,801 Basic and diluted 0.02 (0.03) (0.01) (0.13) earnings (loss) per share SINOVAC BIOTECH LTD. Consolidated Statements of Cash Flow June 30,2013 (Unaudited) (Expressed in U.S. Dollars) Three Months ended June 30 Six Months ended June 30 2013 2012 2013 2012 Cash flows used in operating activities: Net income (loss) for 1,914,120 (2,217,822) (451,924) (9,894,013) the period deferred income tax (17,272) 69,231 (14,783) 66,329 stock-based 61,854 173,791 137,693 253,966 compensation inventory provison 767,811 1,239,399 767,811 1,325,263 provision for (recovery of) doubtful 603,602 - 885,792 - allowance Impairment of equipment and 82 2,460 (2,319) 2,460 losses(gain) on disposal unrealized foreign - 166,701 - (43,880) exchange gain (loss) research and development - - - (79,116) expenditures qualified for government grant depreciation of property, plant and 1,787,173 1,293,974 3,485,540 2,546,524 equipment, deferred government grants recognized as - (325,965) (397,169) income accreation expenses 34,282 68,398 52,373 136,789 Changes in assets and liabilities: accounts receivable, (4,510,518) 614,574 (8,287,685) (671,232) trade inventory (3,581,987) (4,845,918) (6,657,043) (6,165,393) income tax payable - (3,136,687) - (3,124,477) prepaid expenses and 399,292 (293,778) 255,543 488,378 deposits defer revenue (161,644) (5) (1,228,643) (99,522) accounts payables and (592,990) 882,535 1,753,684 (2,522,272) accrued liabilities Net cash used by (3,296,195) (6,309,112) (9,303,961) (18,177,365) operating activities Cash flows from financing activities Loan proceed 3,304,721 3,985,568 10,784,502 6,009,507 Loan Payments (161,606) - (161,606) - Proceeds from issuance of common 406,240 343,040 417,120 393,440 stock Subscription received 8,456 2,400 8,456 2,400 Dividends paid to non-controlling - - - (800,717) shareholder of Sinovac Beijing Loan from non-controlling - - - 3,175,266 shareholder of Sinovac Dalian Government grant 220,187 240,580 523,813 240,580 received Net cash provided by 3,777,998 4,571,588 11,572,285 9,020,476 financing activities Cash flows used in investing activities: Prepayments for acquisition of 346,884 1,219,610 208,330 886,830 equipment Acquisition of property, plant and (855,249) (4,878,770) (2,439,947) (7,506,451) equipment Net cash used in (508,365) (3,659,160) (2,231,617) (6,619,621) investing activities Exchange gain on cash 510,738 347,410 768,765 930,188 and cash equivalents Increase (decrease) in cash and cash 484,176 (5,049,274) 805,472 (14,846,322) equivalents Cash and cash equivalents, beginning 91,562,252 94,489,647 91,240,956 104,286,695 of period Cash and cash equivalents, end of 92,046,428 89,440,373 92,046,428 89,440,373 period Cash paid for interest 696,361 231,563 1,295,796 477,639 Cash paid for income - - - - taxes Supplemental schedule of non-cash activities: Acquisition of property, plant and equipment included in accounts payable and 3,750,767 9,962,278 3,750,767 9,962,278 accrued liabilities SOURCE Sinovac Biotech Ltd. Website: http://www.sinovac.com
Sinovac Reports Unaudited Second Quarter 2013 Financial Results
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